Gasoline prices set to rise next month, fall for year

SAN FRANCISCO (MarketWatch) — This year is set to be another volatile one for gasoline, with higher pump prices likely in the next several weeks, but consumers may be left smiling in the end.

The average U.S. price for regular gasoline fell in 2013 from the year before, and experts predict that prices are likely to fall again this year.

“Fundamentals for gasoline are improving for the U.S. consumer, with retail prices to gradually decline this year from 2013,” said Brian Milne, energy editor and product manager at Schneider Electric.

The price per gallon for regular retail gasoline averaged $3.505 in 2013, down from $3.618 in 2012, according to the Energy Information Administration. The government predicts further declines to averages of $3.46 this year and $3.39 for 2015.

Primary reasons for the shift to lower fuel prices include “less demand amid greater vehicle efficiency and a behavioral change in the U.S. consumer, and a revival in U.S. crude production, with output now at a 25-year high and still climbing,” said Milne.

“Higher crude output is by far the leading catalyst for the lower trend in gasoline prices,” he said.

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The daily average U.S. price for regular gasoline stood at $3.287 a gallon on Thursday, down from $3.32 at the start of the year, according to AAA.

Prices had been slowly dropping across the country, with the national average down 16 out of the previous 19 days — up until Wednesday’s increase, said AAA spokesman Michael Green.

“We are about to enter a period of rising gas prices as the seasonal maintenance period begins,” he said, noting that in 2013 the national average increased 50 cents per gallon from Jan. 18 to Feb. 27. Some refineries have already begun maintenance but the bulk will begin in February and could last through late spring, he said.

“Prices are likely to rise soon as the market anticipates widespread seasonal refinery maintenance,” said Green. “Drivers should expect to pay more for gas in February.”

Roller-coaster ride

Factor in that spring refinery maintenance, the recent cold weather’s impact on demand and refinery production, and the upcoming summer driving season, and the market’s poised for another roller coaster year.

Schneider Electric’s Milne expects prices to peak early in the second quarter, with average prices moving between a low of $3.25 and a high of $3.75 a gallon during the year.

U.S. gasoline prices will see “huge swings in regional volatility in 2014,” according to a fuel outlook report from GasBuddy.com, a group of local websites that allow visitors to post and view recent retail gasoline prices.

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